MySpace plans to slash its workforce by nearly half amid reports that owner News Corp. is preparing to sell the money-losing social network.
MySpace chief executive Mike Jones said Tuesday that the site was starting a "significant organizational restructuring" that would result in a 47% reduction in staff, or about 500 employees. The company employs 1,100 people worldwide.
The layoffs were to take place across all divisions globally. However, the site's international operations appeared to take the brunt of the cutbacks. MySpace planned to replace its advertising sales and content operations in the U.K., Germany, and Australia with local partnerships, maintaining only a "core" international team to manage the partnerships.
"Today's tough but necessary changes were taken in order to provide the company with a clear path for sustained growth and profitability," Jones said in a statement.
All Things Digital, the tech site of The Wall Street Journal, has reported that News Corp. executives are making the cuts before they start shopping the site to private-equity buyers. Yahoo also could be approached, the site said. The Wall Street Journal is also owned by News Corp.
MySpace says the layoffs are the result of the site's recent switch from a social network focused around communications between people to an entertainment site for young adults who enjoy discussing and sharing music and video from their favorite artists. A redesigned MySpace was launched last October.
"The new organizational structure will enable us to move more nimbly, develop products more quickly, and attain more flexibility on the financial side," Jones says.
MySpace claims it has seen an uptick in new and returning users since the redesign, saying more than 3.3 million new profiles have been created. The site also says it has seen a 4% increase in mobile users, which total more than 22 million.
Nevertheless, MySpace's financial performance hasn't been good. The News Corp. division responsible for MySpace reported an operating loss of $156 million in the quarter ended last Sept. 30, mainly due to losses from the site. Chase Carey, chief operating officer for MySpace, told analysts in October that the site's losses were not "acceptable or sustainable."
"Our current management did not create these losses, but they know we have to address them. We judge in quarters, not in years," Carey said.
News Corp. bought MySpace in 2005 for $580 million, while Facebook was just a fast-growing upstart. Today, MySpace has about a third of the number of monthly visitor as Facebook, according to ComScore.